Chemical and pharmaceutical industry expects sales to decline in 2020

Chemical and pharmaceutical industry expects sales to decline in 2020

German chemical and pharmaceutical industry expects a weaker full year after significant declines in the second quarter.

In 2020, revenues were allowed to decline by six percent to 186.4 billion euros compared to the previous year, as the industry association VCI announced in frankfurt on tuesday. VCI expects production to fall by three percent. If you exclude the pharmaceutical industry, production was allowed to fall by four percent.

"Our industry suffered a historic slump in the second quarter," said VCI president christian kullmann. The shortage of orders was not the only challenge, however; there were also problems with the supply chains. Nevertheless, kullmann does not expect chemical and pharmaceutical companies to shift production from asia to germany.

Production in the chemical-pharmaceutical industry fell by 5.8 percent in the second quarter. Excluding pharmaceuticals, production was 8.5 percent below the previous year’s level. The turnover of germany’s third-largest industrial sector, with around 464.000 employees in this country shrank by 11.5 percent to 96 billion euros. Despite this slump, the companies have come through the global crisis significantly better than other industries, said kullmann.

The association assumes that the recession has bottomed out. "We are seeing the first signs of recovery," said kullmann. However, the sector is a long way from a "buoyant recovery", he says. If another shutdown could be avoided, demand for chemicals and pharmaceuticals was allowed to stabilize in the second half of the year. However, the association expects the sector to return to pre-crisis levels by the end of 2021 at the earliest.

The cyclically sensitive chemical industry has long been suffering from weak industrial demand in germany and global trade conflicts. The crisis in the automotive industry, which buys coatings, plastics and tires from the chemical industry, is having a particularly severe impact on the sector. According to the VCI, around 50,000 chemical employees are currently on short-time work.

Last year, sales in the german chemical and pharmaceutical industry shrank by 2.3 percent to 198.3 billion euros. In 2018, the chemical and pharmaceutical companies in the VCI had still achieved record sales of 203 billion euros.

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